Under-performing superannuation funds should lose their default fund status, the Australian Institute of Superannuation Trustees (AIST) has told the Productivity Commission.
AIST told the Commission, in a public hearing into alternative models for setting default super funds, that long-term under-performing default funds should lose that status.
AIST CEO Eva Scheerlinck also called for better regulation to help consumers compare net performance between super funds. AIST has supported the publication of net benefit league tables of super funds by APRA.
“Default members might want to leave a default option at some stage, and both members and employers might reasonably want to understand and compare their selection/default against the wider superannuation market,” said Ms Scheerlinck.
Ms Scheerlinck also told the public hearing that there are benefits to having industry-specific default funds.
“One of the very positive aspects of the current default system is that many employees are connected with default superannuation arrangements that are most appropriate to them.”
“Such a system recognises that different industries have different demographics that may require a different investment management style, different services, such as intra-fund advice, and different insurance offerings.”
The AIST submission recommends the Productivity Commission “require a legislative industrial-based framework to balance the interests of employer and employee in any model for the selection of default superannuation funds”.
“AIST strongly supports the Commission’s view that a quality filter is needed to short-list default funds and that the filter should be higher than the MySuper requirements,” Ms Scheerlinck said.
“But we also note that these measures already exist in the current Fair Work Commission default fund selection process which must be given fair consideration in the review process.”